Hey folks! Welcome back to Short and Sweet Newbie Week!
So far, we’ve covered: how big your list needs to be before the money starts happening, and whether you really need to be on social media, and how much time it takes to actually run a business. If you haven’t seen those, click those pretty little links to catch up.
Now, on to today’s question.
(Semi-related aside: You’ve still got a couple days to get $100 off Zero to Hero. And a kind person asked for payment plans, which are now available. You can sign up here.)
Today’s question: How much does it cost to start a business?
Well, now. We’re officially moving into contentious territory. This is a very brave question of you to ask, and a very foolish question of me to answer.
Let’s do this.
To answer this question, we must create an uncommon differentiation, one that in hindsight makes sense, but in foresight is rarely considered. We have to check:
Are we asking how much it costs, or are we asking how much people spend?
Because in business, as in most things, those are VERY different questions.
Once upon a time, I heard a great story about Howard Schultz.
(Howard Schultz is the founder of Starbucks.)
Katie Couric was interviewing him, and giving him flack for Starbucks’ prices. She didn’t like that they sold $5 cups of coffee.
He, cool as a cucumber and totally deadpan, says… they don’t sell $5 cups of coffee.
She balks, and insists that, um, yeah, actually. They do.
Nope, says Schultz.
They go back and forth for a bit, and he wants her to back up her claim. She describes her typical order and says, see? It costs five bucks.
Ah, he says. I see the problem now.
That, he says, is not a coffee. That is a Venti two-pump mocha Frappuccino with extra whip and sprinkles. That does indeed cost five dollars. But coffee?
Coffee costs a buck fifty, just like it ever did.*
So how much does coffee cost at Starbucks? About as much as you want it to.
The same is true when starting a business.
You want a business? That’s usually pretty affordable.
You want a Venti two-pump mocha business with extra whip and sprinkles? That’s going to cost you.
“That’s all very nice, Naomi. But you said you’d give numbers.”
So I did.
If you’re in the coachy-teachy-experty-healy information marketing space, your business requires the following things that cost money. There are some businesses that need a little more, some that need a little less, but this is about normal.
You will need:
- A website
- Graphics or photographs for that website
- A mailing list
- Hosting for your stuff (This may be only your website, but it could also be video or audio files.)
- If you’re making courses or information products right away, you might want a course hosting platform (Teachable, Thinkific, Kajabi, or the like)
- If you suck at tech, you’ll need someone to take care of installing things.
Within each of those categories, there is a huge range of price points. To wit:
A surprisingly spiffy and contemporary website theme might run you $100-$200, and a simple install of that theme might be about that price again. A custom designed website from scratch, on the other hand, can pretty easily run you ten grand.
Images, graphics, and logos. Unless you’re a pictures fangirl, you can easily go with cheap or free for this. Photos can be free, but most free photographs are terrible, so you have to sort through a lot of junk, which takes time and also surgically removes your will to live. Alternatively, go to a stock photo site and pay a buck an image, or get a bundle of themed images for $10 or so. As far as your logo, I heavily recommend Canva, which is free. I made 10 Canva logos in 20 minutes for Plug and Play Branding and they were quite acceptable.
Cheap web hosting is cheap – maybe a hundred bucks a year? The hosting is lousy, but you’re new, so you may not have a choice. (Pro tip: Buy proper hosting the moment you can afford it. This is VERY high priority, for reasons you are too new to need to understand.)
File hosting varies, but it’s usually nominal, especially if you’re new and thus don’t have many files or people downloading them.
A course hosting platform is a fairly luxury option, so if you’re on a shoestring, you shouldn’t even be considering it. If you have some money but not a lot, assume less than $100 month, and you can pay monthly.
A tech person is difficult to quantify, because service providers vary so widely, and what you need them to do will vary as well. Call it $500-$1000. (Please bear in mind that there is nothing these people can do that is not available with patience, YouTube, and a lot of emails back and forth with some company’s tech support.)
So how much does it cost?
Assuming you can do at least some of your own tech, you can start for less than $1000. Add $500-$1000 if you can’t.
This brings us to the unasked but undoubtedly desired second question, which is:
How do you keep costs down?
I’m so glad I decided you asked! I have things to say.
Here are the easiest ways to save money in startup:
Make your first website premium themed, not custom made. Get a premium web theme and pay someone to set it up if you’re not techie enough to do it yourself. Broke people should not be paying web designers. Get a designer when you have money.
(If you are a complete failure of a human being as it applies to technology, go with Squarespace. Get the lowest or second-lowest package.)
Do not buy any web service until the instant you need it. This applies to both the service itself, like an autoresponder, as well as any component of a service, like fancy upgrades for your autoresponder. You do not need social media automation before you have social media. You do not need a course hosting platform before you have courses. And so on. I promise you, your grandma from Poland didn’t pick up a few extra freezers for her new deli because it would be cool to have them when she needed them one day. She did fine. So will you.
Keep a very close eye on your training budget. Follow the same rules with training as you do with services. If you don’t know you’re going to use it, don’t buy it.
There are a lot of good reasons to take a course, and I am, obviously, in the course making business. But you should take courses because they’re the easiest way to get information, or the most comfortable, or the most enjoyable, or the most fun, or whatever reason it is that you like to take courses. But don’t take them because they’re the only way to access business information, because they’re not.
So, how much does it cost to start a business?
Once you move from startup to maintenance, your expenses will change, and those changes will usually be commensurate with your revenue. They more you make, the more it’s going to cost. Luckily, you’ll be making money by then, so you’ll only be resentful, rather than terrified. :)
- Startup: $1000-$2000, depending on how much tech help you need
- Maintenance costs (after startup but before you’re making money): $1000 a year
- Once you’re making money: Who cares?! You’re making money!
In our next instalment, we’re tackling perhaps my favorite question… what do you need to have in place to get started? Until then, have a cookie.
In honor of Short and Sweet Newbie Week – and newbies! – for this week, you can get a sweet deal on my beginners’ course, Zero to Hero. It’s designed to take you from “hi, I’m new” to “this is starting to look suspiciously like a business” in 21 short and simple lessons.
Check it out here: Zero To Hero – Full Course Details
* Forgive me – it’s an old story.